Like exhausted climbers nearing the sum-mit only to find a higher peak beyond, Spain's flagging banks face another push for the top. In February the Spanish government hoped at last to put an end to worries about lenders' health when it asked them to set aside billions in provisions and to raise more capital. It also pushed for mergers to reduce capacity and improve margins in an overcrowded market. These measures provide some comfort. Spain's central bank says that since the middle of 2008, banks have set aside €112 billion ($148 billion) against loan losses. This year it asked them to set aside another €54 billion in provisions and new capital (although this double-counted some write-downs that had already taken place). With these plump cushions, Spain's banks can shrug off losses amounting to about half of their loans to property developers. The imf now reckons that Spain's largest banks have enough capital to withstand most shocks, although its smaller and weaker ones remain vulnerable.
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